Does anyone know if there are any restrictions for developing free open source software using the Java RIM libraries, aside from the $100 API key? I don't even want to get started if any issues are going to come up.

Anyone can develop using the controlled API. The $100 key is required to sign the code to deploy on an actualy device. Programs using a controlled API will only run in the simulator unless signed. Only the person who has purchased the key can sign the code for deployment.